Debt-ridden property developer Paliburg Holdings has ceased talks on the possible sale of its stake in Regal Hotels to an unknown third party. The company had wanted to sell the stake in its listed hotel arm to help pay off part of its debts, estimated at HK$9.05 billion at the end of June. In a statement, Paliburg said: 'The board of directors . . . would like to inform their shareholders and investors that the negotiations with the third party regarding the possible disposal have ceased.' After selling all its United States hotels in 1999, Regal's major assets are five local hotels - Regal Hongkong in Causeway Bay, Regal Kowloon in Tsim Sha Tsui, Regal Airport at Chek Lap Kok, Regal Kai Tak in Kowloon City and Regal Riverside in Sha Tin. The five hotels with 3,350 rooms are worth an estimated HK$9.7 billion in total, say analysts. The analysts said the worsening climate in the hotel and travel sectors following the September 11 attacks might have contributed to the termination of the Regal sale talks. Paliburg's previous announcement in August indicated that the talks had not progressed. In September, property agents said Regal Hotels had put on sale Regal Kai Tak Hotel at an asking price of HK$750 million, representing about HK$1.8 million per room. Analysts said Paliburg terminating its five-month-long asset-disposal talks would mean that the group had to rely on negotiations with its creditors for a debt restructuring to relieve its financial troubles. In February, Paliburg defaulted on its payments in US$161 million exchangeable bonds, causing cross-default to convertible bonds. In a joint announcement, Paliburg and its parent Century City International Holdings said they had been negotiating with their creditors over the restructuring or settlement of their debts. In particular, 'Paliburg is now in an advanced stage of negotiations on a settlement proposal with respect to its outstanding exchangeable bonds and convertible bonds', said the statement. Paliburg also denied press articles in respect of a debt- restructuring proposal related to a rights issue, saying the information was unfounded. Century City holds 60 per cent of Paliburg, which holds 74 per cent of Regal Hotels. Century City group, controlled by chairman Lo Yuk-sui, has suffered from heavy debts raised before the Asian currency crisis for property expansion. Century City had net borrowings of HK$9.96 billion while Regal Hotels had debt of about HK$5.04 billion in June. With a high debt level and hence high finance costs, the three companies slid into the red in the first half of this year. Century City posted a net loss of HK$251.1 million for the six months to June. Paliburg posted a net loss of HK$258.2 million for the same period, slightly less than the HK$279 million loss a year earlier. Regal Hotels saw its net loss widen to HK$167.9 million.